KARACHI (April 18 2004): Finance Minister Shaukat Aziz has said that the Securities and Exchange Commission of Pakistan (SECP) is finalising a pension scheme for the private sector, and urged the mutual funds industry to look at the possibility of designing products to meet the needs of retiring people.
The minister was addressing the launching ceremony of 'Faysal Balanced Growth Fund' here on Saturday.
The Fund is a joint venture of Faysal Bank, AKD Securities and Islamic Investment Company of the Gulf.
He said that the GDP growth for current year ending June 2004 would be 5.8 percent, “and that is a conservative figure”.
The minister kept his focus on mutual funds and their potential and opportunities in the country.
He said that the ministry of finance has created an office of Actuary to look at pensions in the public sector. “I would encourage the mutual funds industry to closely liaise with these two institutions,” he said.
He said that the government is keen to develop pension schemes and to encourage the participants of the mutual funds industry to play an active role in such developments.
The insurance industry has already been allowed to offer retirement annuities and certain tax reliefs have been offered to the participants of such annuities.
He said that mutual funds should come forward and create real assets in the economy by creating specific and time-bound self-liquidating funds in the housing sector. He stressed that there is need to address the requirements of the lower and middle-income clientele.
He said that SECP has approved nine new open-end mutual funds and four more funds are in pipelines. He said it was encouraging to see the transformation of the economic policies and vision into realities.
The aggregate net asset value of the mutual funds has increased from less than Rs 25 billion a year-and-a-half ago to more than Rs 100 billion now.
“In the context of our country, the mutual funds industry has finally received an impetus, and I see that it is receiving a recognition as a credible investment vehicle for pension funds, provident funds and other such schemes of employees' terminal benefits,” he added.
In all developed economies and financial markets the ratio of investments in mutual funds is much more when compared with bank deposits. “That is the direction in which we have to move,” said the minister.
He said: “We have completed first-generation reforms successfully but the second and third level reforms are more challenging.”
He said: “It was my dream and vision to develop Asset Management Mutual Funds, which did not exist here. However it is still a long way to go for the fully developed sector of mutual funds.”
He said that foreign direct investment would reach $ 1 billion by the end of this fiscal year. He said that listed capital of KSE has registered an increase of 65 percent and market capitalisation over this period has increased by 329 percent to Rs 1.45 trillion.
He said that a lot is being done for the development of Islamic banking.
The CEO of Faysal Bank, Farooq Bengali, said that 'Faysal Asset Management Company' has been formed with an initial paid up capital of Rs 50 million with 50 percent, 30 percent and 20 percent participation of IICG, FBL and AKD, receptively. The FAML offers a combined expertise of its sponsors who are determined to set new standards in fund management and provides a unique opportunity to general public for their investment and savings.
Bengali said that this first open-end mutual fund had received incredible response from individuals and local corporates with commitments for Pre-IPO investments in FBGF of over Rs 1.2 billion, in addition to the Seed Capital investment of Rs 600 million.
He said that the three companies plan to launch various other funds including closed-end fund through Faysal Asset Management Limited to provide profitable investment opportunities to general public.
Ali Ansari of AKD Securities also spoke and briefly touched upon the mutual funds' performance and attraction in the country.